House debates

Wednesday, 24 November 2021


Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021; Second Reading

1:24 pm

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | Hansard source

I began my career as a lawyer a long time ago. I've since transitioned to becoming an economist. That's a transition, some people might say, that has both an unpleasant beginning and an unpleasant end, but that's an issue I can deal with at another time. Reflecting upon this bill, the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021, took me back to the early days in my career at the Attorney-General's Department, and it took me back to a maxim: justice delayed is justice denied. It's very much at the core of our legal system and goes to the issue of whether or not the legal system is denying the provision of justice in such a way that it is meaningful to a person who is seeking redress. It struck me that delay is indeed a denial of justice, but an even more fundamental denial of justice is to not even have access to legal representation and to the court system in the first place, and that is what we're dealing with today. What we're dealing with today, in my opinion, is, for many people and many classes of dispute, the most fundamental issue of access to justice. If we fundamentally weaken class actions in the way that I will argue this bill does, we will be denying many people justice in a most profound and egregious way.

Those opposite have stated that this bill is about scalpels and tweaking and improving at the margin—that it's about the way in which we distribute claim proceeds. What I'm going to argue is that it is nothing of the sort; that it goes to the heart of the way in which class actions operate in this country, and in a bad way; that it cuts them off at the knees; and that it will make it so much harder for people to participate in class actions in practice. That's the first argument.

The second is that this is manifested not just in the merits of the issue, which I will run through, but also in the way in which this is being brought here. It has been a completely atrocious process. This government is clearly trying to sneak this bill through after an abridged process in which a biased committee didn't listen to the preponderance of independent expert evidence. So we have an atrocious process leading to a flawed bill that isn't about what it is supposed to be about but is really about cutting off class actions at the knees.

That leads to the third argument, which is that this is a bill that is full of unintended consequences, and I will deal with just a few of them as I only have 15 minutes. It's a bill which is appallingly designed and which will have terrible unintended consequences.

Fourthly, not only is it a very flawed intent and an abridged, appalling process leading to unintended consequences but we have a bill that is possibly unconstitutional, which the second reading speech and the majority committee report on the bill don't really address in any substantive way. What we have here today is a bill driven by ideology, not by rigour or evidence. That is, as I said earlier, reflected in the fact that the preponderance of evidence was simply ignored by the majority members of the committee.

Let me go to the first issue which I want to address in this contribution, which is that this is not a tweak or a scalpel; this is going to attack class actions at their very heart. This bill is going to change the requirements such that class members will not now opt out but rather will agree in writing to be members of a litigation-funding scheme and be bound by the scheme's constitution. The current model and its advantages have been well summarised by the Law Council of Australia:

Part IVA of the Federal Court of Australia Act … which contains the federal class action regime operates on the … basis of an opt-out structure. Under this system a class action can be commenced without the express consent of group members … The opt-out structure was recommended by the Australian Law Reform Commission … because it promotes access to justice and efficiency. Group members who cannot be identified at the outset or who are unable to elect affirmatively to participate due to social or economic barriers are not excluded from the legal system and a potential remedy.

There has been a great deal of research in recent years, in psychology, economics and many social sciences, which points to the fact that opt-out schemes work in a materially significant way to improve participation rates. We know that if you move from an opt-out arrangement to an opt-in arrangement, particularly where there is great complexity, we know who the people are that will drop out and won't participate—it's going to be people who are vulnerable. This is in fact a problem that the Australian Law Reform Commission explicitly identified when it said that the opt-out arrangements are particularly important for large classes of potential claimants in rural, regional and remote communities.


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